Deutsche Bank is preparing its next pan-European multi-borrower CMBS, the €316m DECO 2015 Charlemagne transaction, which is the securitisation of three loans which are secured by an aggregate 37-strong predominantly office and light industrial commercial property portfolio.
DECO 2015 Charlemagne is comprised of three loans secured by 37 offices, industrial properties and retail assets with a combined value of €492.2m, reflecting a portfolio LTV of 64.2%.
By loan balance, the portfolio is 67% offices, 26% light industrial and 7% retail. By geography, the property portfolio is 70% in the Netherlands, 18% in Belgium and 12% in Germany.
The first loan is the refinancing and enlarged Windmolen Loan, in Deutsche Bank’s Tulip CMBS, which fully repaid in April.
The sponsor, PPF Real Estate Holding, has acquired an additional asset to the original nine-strong office and retail property portfolio across the Netherlands in the €47.5m acquisition of Millennium Tower in Rotterdam from Commerzbank in December.
At the time of the acquisition eight months ago, the 30,000 sq m asset comprised a mix of hotel and office accommodation, let to 10 tenants with a 20% office vacancy.
PPF Real Estate has also sought to capitalise on tightening credit margins in the two years since the legacy €130.15m five-year Windmolen Loan was originated, which was then priced at 500 basis points over three-month Euribor.
The refinanced loan for the larger 10-strong portfolio is also at a higher leverage, approximately €178m and at circa 65%, which implies a portfolio value of around €273m. Deutsche Bank priced the loan at 265 bps, which exemplifies tightening credit spreads for the Netherlands in the last two years.
The second loan is secured by a 19-strong light industrial portfolio owned by MStar Europe, the joint venture set up by M7 Real Estate and Starwood Capital. MStar acquired 17 of the 19 properties in March for €74.5m, while two assets purchases were still pending.
Assets locations include in Cologne, Düsseldorf, Frankfurt and Stuttgart in Germany as well as in Amsterdam, The Hague, Rotterdam and Utrecht, in the Netherlands.
CoStar News understands the entire loan to MStar is around €80m, while the full 19 assets are valued at around €129m, implying approximately a 62% LTV. The loan was priced at 250 bps.
The third loan is secured by Ares Management’s Pegasus Business Park, located near the Brussels International Airport. Ares’ loan is approximately €55m and priced at 360bps.
The business park, which consists of nine office buildings, was acquired from Segro for €83.4m in July 2014, at which time the vacancy rate was approximately 20%. Tenants include Cisco, Regus, Black & Decker and Johnson Control.
The blended margin across the €316m DECO 2015 Charlemagne is 278 bps. The weighted average remaining loan term is 4.5 years and at full portfolio level the occupancy is 76.8%.